Letter: Ditch social compact and change tack - BusinessLIVE

The president’s state of the nation address (Sona) provides an annual “opportunity” (an SA cliché if ever there was one) to review past successes and failures, and to set out the course ahead. Lately, the successes have been outweighed by the failures and the course ahead has been anything but clear.

Last year the big idea was a social pact. Everyone would make sacrifices for the common good, and this would propel SA from crisis to recovery to prosperity. This didn’t work out, since neither labour nor business felt they could compromise their core interests.

Presumably, too, because the government’s credibility as a “partner” is tarnished. It’s difficult to see what it intended to offer, apart from more-of-the-same and doing things (such as combating corruption) to which it is already nominally committed.

Fixing Eskom within a year (note: before the next election) will almost certainly be the message in this week’s Sona — for which a state of disaster to move things along and around (not least large sums of money) has been mooted.

The record of the past decade and more, and of President Cyril Ramaphosa’s incumbency, points to a dread reluctance to take politically sensitive decisions. It has been highly resistant to stepping away from ideological goals (race-based “empowerment” and employment demands, for example); from the blatantly political (the illegal “deployment” of party hacks to the public service); and from the venal (outright corruption).

To get SA back on track government needs to change tack. This means it and the governing party will need to make what might seem unimaginable sacrifices for the good of the country.

This would be with or without the political cushion of a “social compact”. These would include a hard turn to meritocratic appointments in the state and public enterprises, irrespective of the race or political orientation of those concerned. A value-for-money approach to procurement, downgrading significantly the role of “empowerment” and localisation. A dialling back of regulations, to make doing business substantively easier.

The latter is no longer even an ideological issue, but speaks directly to the damage done by an incapable state trying to intervene in economic decisions. And the removal from consideration of such notions as expropriation without compensation that undermine investor and entrepreneurial sentiment.

None of this will be easy, and all will hold costs for a government and party that have scant appetite for doing so, and which stand to face condemnation from constituencies that are deeply invested in the current course. The choice facing government, party and president is whether to pay these costs in the interests of SA’s future.

Terence Corrigan
Institute of Race Relations  

https://www.businesslive.co.za/bd/opinion/letters/2023-02-07-letter-ditch-social-compact-and-change-tack/